General Insurance Corporation of India — Q3 FY26 earnings call

I would like to disagree on your statement that we are trying to move closer to 100%. There are two parts to our portfolio, domestic and foreign. We would certainly like to move below 100%, particularly for foreign book. But that will not be a realistic target or a strategy for domestic business because the investment income on both the portfolios are fundamentally different. So, we will continue with our guidance of about 1% improvement on a composite portfolio rather than trying to achieve 100% for, say, domestic or foreign.

Management clarified that a 100% combined ratio is not a universal target, especially for domestic business, and reiterated the 1% annual improvement goal for the composite portfolio.

Asked by Janish Shah

If obligatory goes away or gets reduced, it is not a straight loss of business. A substantial part, something like probably 25% to 50%, will get readily converted into voluntary business, non-obligatory business. So, it is not a, say, win or lose. ... Our capital deployment will be free. And particularly, those companies which are playing close to their targeted solvency range, they will definitely need a substitute reinsurance requirement immediately.

Management provided a nuanced view on potential changes to obligatory business, suggesting it could free up capital and convert to voluntary business, rather than being a direct loss.

Asked by Janish Shah

So, I agree with your observations, and I think whatever three classes you have picked up, they are the points, they are the segments where we need to focus. We are mindful of that. I think we have addressed the explanation for life, higher combined ratio in the Q2. This cargo and motor, both are definitely under management focus, and we have already taken certain steps. And we expect that those steps in terms of underwriting discipline will bear fruit going forward.

Analyst highlighted specific underperforming international segments, and management acknowledged these as key focus areas for improvement through underwriting discipline.

Asked by Madhukar Ladha

On the overseas, January 1st renewal, it was soft. We had got some indication because we are part of some of the conversations that happened before the renewal, and we were bracing for the softness of the market. But we observed that there is plenty of capacity, plenty of capital in the market. And therefore, there were heavy pressures on the shares.

Management confirmed a softening pricing environment in overseas markets during January renewals, indicating increased competition and pressure on shares.

Asked by Sanketh Godha

So, when I said about rating, I was talking about our growth and our market share, which we should be able to restore. And we should also be able to access other markets based on our A rating. And the underwriting discipline is more on the operating performance side. So, I would like to say that these are two separate things. And alongside the growth and restoration of the market share, improvement in performance can certainly go on. They can definitely run in parallel. There is no contradiction there.

Management clarified that while rating upgrade helps growth and market access, combined ratio improvement primarily stems from underwriting discipline, and both can progress in parallel.

Asked by Sanketh Godha

I would just like to add here about the observation that you made, and I think it is a fairly good observation from your side that motor ODs can emerge as a significant opportunity. I think it is one of the segments which will get affected by the climate change, more flood events. And it definitely presents an opportunity. So, of course, we have ample capacity. You know that we are in a very good position in terms of the solvency. And we will be definitely exploiting this opportunity to the extent it develops.

Management identified motor OD as a significant growth opportunity, particularly in the context of climate change and GIC Re's strong solvency position.

Asked by Shobhit Sharma

Health, the non-obligatory portion is quite volatile as in terms of volumes. If we don't renew a particular contract which has significant volumes, we end up de-growing. Our focus will always be on the contract that will make sense to us. And we may win some. We may lose some. But yes, it is the dynamics that will play out and manifest into de-growth or growth. ... it is not necessarily that we are losing market share or we are losing business. It can also be that insurance companies are retaining more.

Analyst questioned GIC Re's degrowth in health despite market growth; management attributed it to volatility in non-obligatory segments and primary insurers retaining more risk or restructuring reinsurance.

Asked by K. Karthikeyan

It is about INR 2,000 crore, and it is supposed to be a strategic kitty that we are building. So, it is not that, say, suppose it is crossing, say, INR 3,000 crore, we will start withdrawing. It is a long-term strengthening of the balance sheet and our capital position in a way. So, we will continue to build and will not withdraw unless there is a, say, major catastrophe which puts stress. ... And we will be undertaking a major review when we touch something like INR 5,000 crore.

Management provided clarity on the current size and future utilization strategy of the CAT reserve, indicating it's a long-term capital strengthening tool with a review trigger at INR 5,000 crore.

Asked by Ritika Dua